Will Nifty follow history and crash below the 20,000-mark? Details here

The NSE Nifty 50 has been trading above the psychological 20,000-mark since December 2023. Here are the key levels to watch out for on the index.

The market sell-off on account of the tariffs imposed by US President Donald Trump may not alone have the muscle to take the Nifty 50 index below the 20,000 mark, feel analysts. That said, the index could come under pressure over the next few weeks in case the March 2025 (Q4-FY25) corporate results and the guidance disappoint. In such a scenario, Nifty 50 may test the 20,000 mark.  The Nifty 50, according to Nandish Shah, deputy vice-president for prime research at HDFC Securities, should find support at around 21,000 levels and gain ground albeit amid volatility. A lot of the negative news regarding tariffs, he said, was already factored in and hence the Indian markets relatively outperformed their peers in the recent fall.  "The current market dip is more to do with overall global sentiment rather than weak fundamentals of the Indian markets. That said, the road ahead in the medium-term will depend on how the corporate earnings play out. If the earnings, especially the guidance disappoints, the Nifty 50 index can then test the 20,000 mark. But then, that’s not my base case," Shah said.    Meanwhile, the bulls had an upper hand on Tuesday, with the Nifty 50 index surging a little over 300 points, or 1.4 per cent to 22,475 levels in intra-day deals. The pullback came after Monday's steep fall of 742.85 points, or 3.24 per cent.  Equity markets in India have been in a downtrend for more than six months now, amid concerns over the expensive valuations, slower corporate earnings, unabated selling by foreign investors and now the Trump-triggered tariff war.  In the process, the NSE Nifty 50 index as of April 07 shed as much as 17.3 per cent in little more than six months from its all-time peak of 26,277 registered on September 27, 2024. In the preceding nine trading sessions, the Nifty has cracked by over 2,100 points, and was roughly 1,750 points shy from the 20,000-mark - a key psychological level the index has held since December 2023.    Amid today's pullback rally, Ajit Mishra, senior vice-president for research at Religare Broking expects the Nifty to face resistance in the 22,500 - 22,800 zone. A decisive close below the 21,700 level on the Nifty, he said, could pave the way for further downside toward 21,300 in the near-term. 

Momentum oscillators

  Technically, the key momentum oscillators such as the 14-day Relative Strength Indicator (RSI), Stochastic Slow and the Moving Averages Convergence-Divergence (MACD) have seen a negative crossover on the daily scale. Hence, the near-term bias for the Nifty is expected to remain tepid. That apart, Monday's gap-down below 22,900 marks that as a key resistance level going ahead.    The medium-term chart shows that the Nifty is seen testing its 100-Weekly Moving Average (100-WMA), which stands at 22,145 for the first time since March 2023. The Nifty has more or less respected this key threshold post the upside breakout in July 2020. Charts, however, warn that a breakdown below the same can trigger a slide towards the 200-WMA, which stands around 19,700 levels. CLICK HERE FOR THE CHART  On the monthly scale, the Nifty sits atop its super trend line support, which exists at 21,500 levels. Barring the panic-driven Covid-19 fall, the Nifty has broadly sustained above this key indicator since March 2017. Break and sustained trade below the same can push the index towards the 50-Monthly Moving Average (50-MMA) at 19,500 levels.  And finally, the Nifty has left a run-away gap between 20,291 and 20,508 in December 2023. Historically, it has been observed that the Nifty tends to fill all un-filled gaps eventually. Thus, a dip below 20,291 seems warranted as per history. 
 

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